Executive Summary: Key Legal and Evidentiary Issues

• At the heart of this dispute is a residential renovation contract between Cashyn Homes Inc. and Keshas Custom Creations, with each party alleging breach by the other.

• The Appellants sought late-stage amendments to their counterclaim — including adding a new defendant, new causes of action, and dramatically increasing damages from ~$48,578 to ~$293,375 — which would have triggered a transfer to a higher court.

• Central to the appeal is whether the lower court (Court of Justice) correctly applied the legal test for amendment of pleadings, particularly regarding prejudice, hopelessness, and bad faith.

• The Court of King's Bench partially overturned the lower court decision, allowing some amendments (e.g., adding Brennan Holowaty as a defendant limited to negligence claims, and increased Extra Work damages) while upholding denials of others.

• The Transfer Application to the Court of King's Bench was denied, as allowed amendments kept the total claim within the Court of Justice's $100,000 monetary jurisdiction cap.

• A finding of bad faith was upheld against the Appellants due to the late timing of the amendments and the significant prejudice caused, with costs consequences to be determined.

Background and contractual dispute

In 2022, Cashyn Homes Inc. purchased a residential property in northwest Calgary with the intent to renovate and resell it. Around October 5, 2022, Cashyn entered into a written contract with Keshas Custom Creations — a business operated by Bryanna Lindstrom and (Stesha) Madison Lindstrom, who were each 50% shareholders and the Vice-president and President respectively of 1198965 Canada Inc., a federally incorporated entity carrying on business in Alberta under the tradename Keshas Custom Creations. The contract was amended in writing on two occasions: around October 15, 2022, and again around November 17, 2022.

The parties' positions were directly opposed. Cashyn claimed that Keshas failed to perform the renovation services to the required quality and timeliness, despite being paid more than agreed, necessitating third parties to redo or complete the work. Conversely, the Lindstroms argued that Cashyn had failed to provide necessary materials, equipment, and pre-conditions required for completion, and that Keshas had in fact performed the work but was not fully compensated in accordance with the amended contract.

Procedural history and the lower court decision

Cashyn filed its Civil Claim in February 2023, claiming $43,500 in damages. The Defendants (the Lindstroms) responded with a Dispute Note seeking $49,000. After a pretrial conference in September 2023, both sides were granted leave to amend their pleadings. Amended claims were filed by both parties by November 2023, with trial dates set for July–August 2024.

In July 2024, a case management conference was called by the assigned trial judge just 20 days before trial. This resulted in an adjournment. On August 16, 2024, the Defendants filed a broad application seeking not only amendments to their Amended Dispute Note and Counterclaim, but also a transfer of the action to the Court of King's Bench — based on the argument that the newly proposed damages of $293,375.73 exceeded the Court of Justice's $100,000 jurisdictional cap.

The lower court — presided over by Assistant Chief Justice D.B. Higa — granted some amendments but denied others. Specifically, he refused to: (a) add Brennan Holowaty, Cashyn's director, officer, co-founder, and Chief Operating Officer, as a defendant to the counterclaim; (b) allow the significantly increased damages tied to the negligence claim; (c) allow a novel claim for debts going to collections; and (d) transfer the action to the Court of King's Bench. The hearing Justice also found elements of bad faith in the manner and timing of the amendments.

The amendment application and key legal principles

On appeal, Justice C. Dario of the Court of King's Bench reviewed the lower court's decision against the established legal framework for amendment of pleadings. The general rule is that courts should exercise their discretion generously to permit amendments, even after pleadings close, unless narrow exceptions apply — such as serious prejudice to the opposing party not compensable in costs, a hopeless claim, bad faith, or delay contrary to the public interest. The threshold for allowing amendments is low but not non-existent; some evidentiary foundation is still required.

Analysis of specific amendments

Regarding the addition of Brennan Holowaty as a defendant, Justice Dario partially disagreed with the lower court. While Mr. Holowaty was not a party to the contract and there was no basis to pierce the corporate veil for breach of contract claims, the Court found it was an error of law to exclude him from the negligence-based claims — specifically those relating to stolen or unreturned tools, materials, and equipment. An employee or officer can be separately named as a party in a negligence claim to guard against an employer denying vicarious liability by alleging the employee was acting outside of their duties or authorization. His addition was therefore allowed, but strictly limited to the negligence claims in the amendment.

On the negligence-based damages, the lower court had allowed the cause of action in negligence but not the increased quantum of $76,935.06 claimed for personal and corporate items stolen or not returned. The appellate court upheld this denial. The claim for approximately $19,000 in personal items — described in the affidavit as jewelry, houseware, and kitchenware — was found not to be logically connected to the facts raised in the claim. The affidavit's approximation of the value of Keshas' items stolen from the property at $52,748.75 also lacked sufficient evidentiary detail — no delineation of what the missing items were, their book or market value, or otherwise. This was characterized as a bald assertion, similar to concerns raised in the earlier precedent of Hnidan v Shpeley.

Regarding the novel claim for debts going to collection, the Appellants argued that Cashyn's failure to pay in a timely manner caused both Keshas and (Stesha) Madison Lindstrom to be unable to pay other bills, resulting in going to collections and one going to judgment. The Court agreed with the lower court that to the extent the Appellants sought recovery of the entire bills themselves, this constituted double recovery. Further, such non-payment of third-party debts does not fall within the recognized definition of consequential damages. However, purely consequential damages — such as interest amounts payable, collection fees, and legal fees for those amounts that went to judgment — were allowed on appeal in a limited form, capped within the $100,000 limit.

Claims relating to future projects were also addressed. The Appellants sought to add claims for loss of future opportunities based on alleged negligent misrepresentations by Cashyn and Holowaty about work on additional properties. The lower court denied this amendment for insufficient particulars — no details on when the representations were made, to whom, what alternative projects were declined, or why. Justice Dario agreed there was no basis to disturb this finding.

As for the increase to Extra Work damages — from $24,461 to $40,076.73 — this was allowed on appeal. The itemization provided for the Extra Work sufficiently substantiated the increased claim, contrary to the lower court's finding.

The transfer application and bad faith

Because the net effect of the allowed amendments kept the total counterclaim within the $100,000 jurisdictional limit of the Court of Justice, the Transfer Application to the Court of King's Bench was denied. The Court noted that allowing the transfer for only a few thousand dollars of the claim would be far outweighed by the costs that would be levied on the parties and the resources of the Court.

The bad faith finding was separately addressed. The hearing Justice's determination of bad faith was made in the context of the late timing of the Amendment Application, the lack of evidence to substantiate some of the larger cost claims, the claims of negligent misrepresentation without providing sufficient details, and the potential consequence of a transfer application shortly before trial. The Court noted that had the matter been transferred to the Court of King's Bench, 18 months of litigation would have been rendered largely meaningless, and resolution would have been prolonged for years — prejudice the Court found to be significant.

Ruling and outcome

Justice Dario issued a mixed ruling, generally favouring the Respondent (Cashyn Homes Inc.). The bad faith finding of the lower court was upheld. The Transfer Application was denied. Cashyn was awarded regular Schedule C costs for the appeal in the amount of $2,025. The parties were directed to return before Justice Higa to address the costs of the adjournment of the July 2025 trial, within 30 days of the decision if they could not agree.